Goldman Sachs on today's 'Big Brexit' speech from UK PM May

PM May is to give a key speech on Brexit in Florence on September 22. We expect a significant contrast between Friday's speech and PM May's earlier confidence that no transitional deal – and, therefore, very little compromise – would be needed. Taken together, we continue to believe a transitional deal that secures something close to the status quo will be agreed – as the UK becomes an ‘Associate Member’ of the Single Market and EU Customs Union, for 3 years from March 2019. Yet, we also believe the UK will not be prepared to act as a rule-taker in the ‘end-state’. That would place the UK outside the Single Market, after the transitional period has ended.